A: Agilent Technologies Down Almost 30% In 2022, Is Now Time To Buy?

Application-focused solutions provider Agilent Technologies, Inc. (A - Get Rating) operates in Life Sciences and Applied Markets; Diagnostics and Genomics; and Agilent CrossLab segments. The company offers its services to the life sciences, diagnostics, and applied chemical markets.

Earlier this month, A announced its agreement with Amazon Web Services and NVIDIA Corporation’s (NVDA) technologies to showcase time and cost-efficient genomic discoveries for advanced treatment development using secure cloud technology. This collaboration should prove strategically beneficial for the company.

Also, A launched its new LC/MS and GC/MS quadrupole mass spectrometers, advanced devices built to simplify lab researchers’ operating processes.

Despite its recent developments, A has lost 8.4% over the past month to close Friday’s trading session at $112.71. Moreover, it has lost 29.4% year-to-date. However, Wall Street analysts expect the stock to hit $148.60 in the near term, indicating a potential upside of 31.8%.

Here is what could shape A’s performance in the near term:

Strong Financials

For the second quarter ended April 30, 2022, A’s net revenue came in at $1.61 billion, up 5.4% year-over-year. Its non-GAAP net income came in at $340 million, up 13.7% year-over-year. Moreover, its non-GAAP EPS came in at $1.13, up 16.5% year-over-year. In addition, its income from operations came in at $360 million, up 25% year-over-year.

Solid Profit Margins

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A’s trailing-twelve-month EBIT margin of 23.20% is significantly higher than the industry average of 1.27%, while its trailing-twelve-month EBITDA margin of 28.28% is 617.2% higher than the industry average of 3.94%.

Moreover, its trailing- twelve-month net income margin of 19.35% compare with the industry average of negative 1.93%. Also, its trailing-twelve-month asset turnover ratio of 0.63% is 77.2% higher than the industry average of 0.35%.

Favorable Analyst Expectations

Analysts expect A’s revenue to increase 15.2% year-over-year to $6.42 billion in 2022 and 7.3% year-over-year to $6.88 billion in 2023. Also, its EPS is expected to grow 22.5% in the current year and 10.4% next year.

Moreover, its EPS is estimated to increase 14.4% per annum for the next five years. The stock surpassed EPS estimates in three of the four trailing quarters.

Among the ten Wall Street analysts that rated A, seven rated it Buy, while three rated it Hold.

POWR Ratings Reflect Promising Outlook

The stock has an overall rating of A, equating to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has a B grade for Quality, consistent with its higher-than-industry profit margins.

The stock has a C grade for Stability, in sync with its beta of 1.06.

In the 53-stock Medical – Diagnostics/Research industry, A is ranked #3.

Click here for the additional POWR Ratings for A (Growth, Value, Momentum, and Sentiment).

View all the top stocks in the Medical – Diagnostics/Research industry here.

Bottom Line

The company has delivered significant growth in its last reported quarter. Moreover, its revenue and EPS have increased at CAGRs of 9.2% and 6.4% over the past three years, respectively. So, given A’s impressive profit margins and upside potential, I think investors should take advantage of the dip and scoop up its shares.

How Does Agilent Technologies (A) Stack Up Against its Peers?

While A has an overall POWR Rating of A, one might consider looking at its industry peer Qiagen N.V. (QGEN - Get Rating), which has an overall A (Strong Buy) rating, and Waters Corporation (WAT - Get Rating), which has an overall B (Buy) rating.

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A shares were trading at $112.71 per share on Monday afternoon, down $2.25 (-1.96%). Year-to-date, A has declined -29.20%, versus a -22.73% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...